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CME: Cattle on Feed Figures Expected Above Last Year's Levels

US - UDSA-NASS will release the July Cattle on Feed report tomorrow, write Steve Meyer and Len Steiner.

Based on a survey of industry analysts, Urner Barry has published an average and range for pre-report estimates for this report.

On average, analysts expect June marketings to be up 9.7 per cent, June placements up 6.1 per cent, and July 1 cattle on feed inventory up 1.6 per cent, compared to 2015. See the averages and ranges in the table below.

Within these estimates, there is (as usual) a larger range on the placement expectations. However, all analysts surveyed do expect placements to be above year ago levels.

Factors affecting June placements include; continued increased availability of feeder cattle supply out on pasture, continued lower feeder cattle prices helping incentivise feeders to buy animals, fewer feeder cattle imports from Mexico (down about 33,000 head year-over-year), movement of heifers into feedlots that were not bred or retained, and some lower average cattle feeding returns during June compared to May.

Of course this list is not exhaustive, but it does provide an example of the push and pull factors that influence the number of animals placed in June.

The factors suggesting higher placements include the increased supply of feeder cattle, sustained relatively lower prices of feeders, and heifer movement to feedlots. Reasons for a smaller increase in placements are decreased cattle feeding returns relative to May, fewer feeder cattle imports, and continued favorable pasture and range conditions.

To make a note, this report will be a quarterly Cattle on Feed report. This means the number of steers and heifers on feed will be reported.

We do expect to see a larger number of heifers on feed this year compared to 2015. This does not mean we expect herd growth to stop and transition to herd reduction, but more so we expect to see a slowdown in herd growth with more heifers moving to the feedlots.

On the marketings side, the trend appears to continue with a return to more normal levels of marketings (pre 2014). Daily slaughter levels of steers and heifers supports this.

As we continue to experience increased supplies of feeder cattle and therefore fed cattle, this increased rate of marketings will be key to maintain currentness in the fed cattle complex.

Of course, with larger supplies usually comes lower prices, however consumer demand is still holding up relatively well at the retail level. But, as stated earlier, these lower prices have most likely slowed down herd growth intentions.

The July 1 cattle on feed inventory is expected to be between 1 per cent and 2 per cent above year ago levels. This does not appear over-burdensome for the industry by any means.

However, as we think about the upcoming months of our seasonally high placements, it will be interesting to see just how much larger this year’s placements will be.